Disclaimer: Any opinions expressed, potshots taken, or scientific views articulated are mine, and need not represent the opinions, potshots, or scientific views of the Federal Reserve Bank of St. Louis, or the Federal Reserve System.

33 comments:

Oh, pass the smelling salts. I don't doubt that they are thoughtful and careful economists. Doesn't that rather aggravate the offence? The distortions which so annoyed David Glasner cannot be accidental.

You can add Scott Sumner to the list of people who say Cole and Ohanian are misleading their readers.I do not get Andolfatto's comment to Kevin. We can agree Krugman is vile incubus on modern economic debate with his continual misrepresentation of modern macro. But that does not excuse C&O. Modern macro has enough enemies without scoring stupid own goals.

"But that does not excuse C&O." You have apparently condemned them already, without hearing what they have to say to defend themselves. Remarkable.

I disagree with H&O all the time. But it's fun to learn how they propose to interpret the data (one man's interpretation, is another man's distortion). It's fun to debate them and to point out where and why you think they're wrong. That's how it's supposed to go.

Krugman's persistent and juvenile attacks on the character of people he disagrees with is really quite tiring.

I disagree with David all the time, but I agree with him on this one. Cole and Ohanian have a serious piece of research that they cite at the end of the WSJ piece. There's is evidence, a model, and an interpretation of the evidence using the model. Everything is laid out there, and you can have a discussion about the model, the evidence, and how it's interpreted. There's no more "distortion" in that than in how any economic scientist makes sense of the world. Maybe you have another model in mind you think is better. Maybe you have some other evidence you think is relevant. Those are interesting things to discuss. Forget about whether Hal is mean to his dog or not.

Why is this blogpost about Krugman? Both Scott Sumner and David Glasner were there before Krugman, with Sumner saying that Cole and Ohanian are 'extremely misleading' with their data and Glasner saying that 'the version of events offered by Cole and Ohanian is a shocking distortion'. Shouldn't you at least also be calling Sumner and Glasner 'appalling'?

Sumner and Glasner deserve a slap on the wrist, but we all slip up on occasion in this way. Krugman deserves to be singled out for the persistence of his comically misguided tirades; see his most recent, for example,

David: Why do Glasner & Sumner deserve a 'slap on the wrist'? Their claim seems to be that some very important movements in the data are inconsistent with the C&O story as presented in the WSJ. Is it that G&S's criticism is not embedded in 'modern macro' type analysis? Or that the data movements they focus are, in fact, consistent with C&O's story? Or that those data movements are substantively unimportant? Something else?

is it reasonable to accept any monocausal explanation of the GD? and if not, how do you determine the importance of various factors - regime uncertainty, productivity, real wages, the gold standard, bank runs - in explaining the GD?

You should quiz Cole and Ohanian about this, but my understanding of their work is that they are looking at the Great Depression through the lense of the neoclassical growth model, but I would not characterize their analysis as a "monocausal explanation." I think they are too dismissive of financial factors and their role in the Great Depression, but it's not like I have studied the period carefully.

@Phil, Well, I'm not sure about Sumner, because I did not read what he had to say. But Glasner went too far in imputing an ulterior motive to the authors in question. I think he deserves a slap on the wrist for this. But maybe you do not think so.

David: I see your point and agree (w/you, Steve, and others) that spuriously lining up people into the 'good guys' and 'bad guys' by way of reference to their ulterior motives is not at all helpful. Thanks for replying.

@David, why don't you specifically refute the arguments of Sumner, Glasner, Krugman (and now DeLong, who thinks Stephen is taking to his "fainting couch"). While Krugman may be annoying sometimes, when he disagrees with someone he usually does a good job of pointing out where and why he disagrees, which he's done here. So far you've just name called and said how much worse he is than anyone else. Krugman derangement syndrome...?

The picture Krugman shows is pretty damning od the C/O article. I have yet to see anybody even attempt to defend the substance of the C/O thing. It looks to me that Krugman is calling a spade a spade. You just cant look at the data he is showing and draw the C/O conclusion. I just cant see how. Steve is sort of saying that its ok just for the sake of conversation (which leads me to believe he agrees with Krugman on substance.) For a research paper I'd say fine. But this is a wsj article for the general public from two people working at prestegious public institutions, supposedly summarizing human knowledge as opposed to some crackpot stuff. And while saying they are liars may be a bit over the top -- and Krugman does not-- I can think of a lot of bad things which does cartch this situation pretty well ( bad faith does not seem off mark)

Steve, I'm afraid your argument here (if there is one) is self-evidently pointless. You're basically saying "Cole and Ohanian are good guys, and it's wrong for someone that annoys me like Krugman to ascribe bad motives to them---never mind what they actually wrote." This is a personal argument, not one with any relevance to economics.

I am a little more sensitive than Krugman, and I am not nearly as quick to ascribe dishonest motives. But Cole and Ohanian's mistake here was so egregious that the only alternatives are (1) dishonesty or (2) epic incompetence. We all make mistakes from time to time (certainly I do), but this one was particularly bad, since it dealt with (A) a basic descriptive fact, (B) an era on which Cole and Ohanian are supposedly experts, and (C) it was central to the argument in their article. I wouldn't say that Cole and Ohanian are dishonest, but I am revising my priors about their competence massively downward.

(And for the record, they unquestionably made a mistake. Glasner's post is very clear about this, and Brad DeLong hits the nail on the head: "Williamson should be much more unhappy at Cole and Ohanian's claim that July 1932-June 1933 was 'a period of significant deflation'. The PPI in July 1932 is 11.1. The PPI in June 1933 is 11.2. Cole and Ohanian may be the only people who have ever managed to call a period during which the price level rose as 'one of significant deflation'.")

David Andolfatto: "Are you suggesting that we can grant Krugman a pass for all his distortions, given that he is known to be neither thoughtful nor careful?"

I visit your blog quite regularly. I've often seen you take shots at Krugman. But like our host, you tend to take the line that everybody knows Krugman is just a shrill, out-of-touch celebrity economist. And since everybody knows this, why bother demonstrating it? That doesn't wash.

You need to make your case. Recently, Stephen Williamson wrote a pretty good review essay on John Quiggin's zombies book. I can't say I agree with all of it, but he showed that he can engage with the ideas of someone he disagrees with when he puts his mind to it. It's a good example of what I mean by making your case.

David, I've spent much of my life studying the macro data during the early 1930s, and there is no question that prices and output were strongly and positively correlated during the July 1932 to June 1933 period. I did not call them evil, just pointed out that their op ed was very misleading. And I agree with them 100% on NIRA aborting the recovery--indeed I published studies showing that well before they did. So I have no ideological ax to grind here. I disagree with Krugman.

I'm told they may have relied on the CPI. I hope not, as that data is worthless before WWII. All serious economic historians use the WPI, not the CPI for that period.

@Dave: It is not my job to refute their specific arguments. Heck, I may very well agree with them. I am talking about the practice of lacing one's critique of an argument with slander. Maybe you like that sort of stuff. Fine. I don't.

@Scott Sumner: Scott, I apologize for including you in with Glasner. I deserve a slap on the wrist for that!

@Kevin Donoghue: You evidently do not read my blog enough. I have many posts that make substantive criticisms of Krugman's positions; see, for example,

@David AndolfattoI remember reading those posts, both of which are interesting. Neither of them seeks to argue that Krugman is guilty of numerous distortions, and "neither thoughtful nor careful" -- which you present upthread as acknowledged fact.

Of course it's true that there are theories out there, besides Krugman's, "that generate predictions broadly consistent with the data but which do not lead to the same policy conclusion" but so what? Datasets are finite and the number of possible models is infinite. Krugman has never asserted that the models he champions are the only ones worthy of consideration. He argues that they have fared better than various alternatives: New Classical, Austrian Hangover Theory etc.

"Krugman has never asserted that the models he champions are the only ones worthy of consideration. He argues that they have fared better than various alternatives: New Classical, Austrian Hangover Theory etc."

First, they aren't models, they're statistical relationships. Keynesian economics just fits data with reduced form equations, it doesn't model anything. Second, they have fared well only in the sense that they say "a shock to this thing caused the recession." The other models do that too.

The problem witH Cole and Ohanian is that their whole agenda of research on the Great Depression is quackery, and the fact that they managed to publish in top journals is as bad an indictment to our profession as any.

David, No problem at all. I often overreact to things myself, it's just a part of blogging. And the term "misleading" is ambiguous, I can see how someone would have read it as meaning intentional.

Most academics cherry pick data that makes their argument look good. It's unfortunate, but it's accepted as long as the data is accurate. I guess they used CPI data, which was probably technically accurate, but misleading in my view. BTW, I have a new post on C&O:

"The problem witH Cole and Ohanian is that their whole agenda of research on the Great Depression is quackery, and the fact that they managed to publish in top journals is as bad an indictment to our profession as any."

The fact that you have not managed to publish anywhere is a sign the profession is healthy and arriving at efficient outcomes.